Thursday 26th of February 2009

There are so many things going on in the industry at the moment it is hard to know which one to comment on. ING would be the prime candidate, but I will leave that for another 24 hours or so. The only comment I will make is that its latest proposal over its CDO-backed funds is miles better – indeed millions of dollars better – than the original one. Good on them for dumping the old plan. Instead of ING it is worth looking at the fixed interest sector again and commenting on finance companies and advisers. One of the recurring themes I keep hearing at the moment is around advisers and their loyalty, or lack of it, to finance companies. A number of companies have commented that they have worked hard over the years to support advisers, assist them in their businesses and even supporting the industry through sponsorship of conferences and educational events. The companies I am referring to here are the solid, often-rated, variety; not your shonky Bridgecorp/C+M variety. Obviously part of the reason for their support of the industry is to help them distribute their products. No different to what other parts of the industry, such as managed funds and life insurance providers do. However, the theme which has come out of these discussions is that advisers haven’t been particularly loyal in return and have turned off the funds flow tap pretty quickly. As a result these companies are changing their business models. They are no longer interested in using advisers anymore. Instead they are selling their investments directly to the retail market. What I find curious about all this is that there is a place for finance company products in some portfolios. Investors clearly want to buy and use these products. That has been made abundantly clear by the government guarantee scheme where companies have been flooded with millions of dollars of investment. And it would seem that these people should be getting advice about where to put their money.  But because advisers went off the sector following its meltdown and troubles, they have lost a lot of potential business. And it seems a supportive ally.